OLD China had a very backward economy. At the time of nationwide liberation in 1949, China's grain output was only 218,200 million jin. Industry lagged even farther behind. The output value of modern industry accounted for only about 10 per cent of the total output value of" the national economy with steel production a mere 160,000 tons. The primary problems to be solved after the birth of New China were feeding several hundred million people and developing industry at the quickest possible speed. Unless these two were well handled, New China could not be consolidated. Furthermore, under our socialist system the relations between industry and agriculture are not merely those between two branches of material production, they are in essence the relations between two important groups of the working people — the workers and peasants. Since the worker-peasant alliance is the foundation of the dictatorship of the proletariat, this relationship between industry and agriculture and between workers and peasants must be so managed that it will firm up the proletarian dictatorship. This is why we have always regarded the correct handling of the relationship between agriculture and industry as a question of the utmost importance in our socialist economic construction.

Agriculture Is the Foundation

Chairman Mao has long elaborated the dialectical relationship between industry and agriculture. In his On the Correct Handling of Contradictions Among the People published in 1957, Chairman Mao pointed out: "In discussing our path to industrialization, I am here concerned principally with the relationship between the growth of heavy industry, light industry and agriculture. It must be affirmed that heavy industry is the core of China's economic construction. At the same time, full attention must be paid to the development of agriculture and light industry." "As China is a large agricultural country, with over 80 per cent of her population in the rural areas, industry must develop together with agriculture, for only thus can industry secure raw materials and a market, and only thus is it possible to accumulate fairly large funds for building a powerful heavy industry." "As agriculture and light industry develop, heavy industry, assured of its market and funds, will grow faster.”

[Cannot indentify two words here--Transcriber] the practical experience of China's first and Second Five Year Plans and basing himself on the law of economic development that agriculture, light industry and heavy industry are interdependent and promote each other's growth, Chairman Mao put forward in 1962 the general principle for developing the national economy: "Take agriculture as the foundation and industry as the leading factor." He also pointed out the necessity of putting agriculture in the primary position and arranging the national economy in this order — agriculture, light industry and heavy industry. Agriculture is the foundation of the national economy. This is objectively so and the common law governing the economic development of all types of society. Talking about the physiocrats, Marx said: "An agricultural labour productivity exceeding the individual requirements of the labourer is the basis of all societies." No socialist economy existed in Marx's time. He could only arrive at this most general and correct conclusion by examining the different modes of production in history, especially the capitalist mode of production. Before the advent of socialism, in societies based on the private ownership of the means of production this law operated blindly and on its own. With public ownership of the means of production in the socialist society, it is entirely possible for people consciously to master and apply this law and develop the socialist economy in a planned and proportional way. Everyone knows that rapid development of industry, especially heavy industry, is a matter of great importance in building socialism in an economically backward country. But how can industry, especially heavy industry, be boosted at a faster rate? There are two methods. One is to develop heavy industry by limiting the growth of agriculture and light industry. The other is to give full play to the role of agriculture as the foundation and allow a greater growth of agriculture and light industry to develop heavy industry. The first method which stresses heavy industry to an inordinate extent develops it in an isolated and lopsided way. It robs agriculture and light industry of the investments, equipment, material and labour force necessary for their growth and keeps them far behind heavy industry. This creates difficulties in market, labour force and funds, brings on shortages of grain and other consumer goods, and causes dissatisfaction among the people. Moreover, heavy industry cannot be really developed this way. From a long-term view this method actually slows down the development of heavy industry and yields less satisfactory results. The second method hinges development of heavy industry upon agricultural growth and provides it with a more secure basis for development, thereby helping it develop with greater and better results. The reason is clear. Only when agriculture develops can it provide the labour force, grain and industrial raw materials needed in industrial development, expand the market tor industrial products, accumulate more funds for industry and promote the development of industry at a foster rate. As a socialist country, China cannot build socialism by begging from the imperialists. Still less can we follow their example of plundering the colonies and semi-colonies for cheap farm produce, industrial raw materials and labour force and dumping industrial goods there at high prices to develop industry. Socialist economy can only be built on the basis of maintaining independence and keeping the initiative in one's own hands and relying on one's own efforts, and the funds for socialist industrialization can only come from internal accumulation. We stand for the expansion of-international trade to exchange needed goods on a footing of equality and mutual benefit. In a big country like ours with a population of several hundred million, we can only depend on the supply of agricultural and sideline products from our own resources and sell our industrial products mainly on the domestic market, especially the broadest internal market in the rural areas inhabited by more than 80 per cent of the population. Therefore, giving agriculture the primary place in the national economy is not anybody's fancy or subjective arrangement, but is determined by the position agriculture occupies and the role it plays in the entire national economy. It is also decided by the objective need of our socialist country, which must develop its socialist economy independently. Light industry occupies a very important position in the development of the entire national economy and has a very close bearing on the people's life. Production in a socialist country is not for profit, but for meeting the people's ever increasing needs. The development of light industry not only helps improve the people's livelihood, but can raise the peasants' income and further promote agricultural growth by using more farm and sideline products as raw materials for light industry which, built relatively easily, has a short production period and a quick turnover of funds. In addition, its growth can accumulate more funds for heavy industry and calls for the supply of larger amounts of raw materials, machinery and equipment from heavy industry, thereby helping the latter to expand. In this sense, therefore, without the development of light industry it is impossible to supply the urban and rural population with a rich variety of industrial goods for daily use or to develop heavy industry at a faster rate.

Industry Is the Leading Factor

Stressing the importance of agriculture and light industry does not mean at all that heavy industry is any the less important. Heavy industry which produces the means of production can provide agriculture with an ever-increasing amount of farm machinery, chemical fertilizer, insecticide, electric power and building materials so as to speed up agricultural modernization. This is an important aspect for industry to play the role of leading factor. The development of heavy industry can also provide modern technique and equipment for the various sectors of the national economy and put the entire national economy on a new material and technical basis. Without the development of heavy industry, it will be impossible to have a consolidated national defence, defend the fruits of victory of socialist revolution, attain the all-round development of socialist economy, fulfil our proletarian internationalist obligations and support the revolutionary struggle of the people the world over. Therefore, it is necessary to lay great stress on the development of heavy industry in socialist economic construction. To accelerate the growth of heavy industry, we should handle well the relationship between agriculture, light industry and heavy industry and build heavy industry on the solid basis of agricultural development. Paying attention to the development of agriculture and light industry does not mean that they should get more investments, equipment and material than heavy industry. It means that they should get a proper proportion of the investments, equipment and material which should not be freely diverted to other uses. This is not merely because the core of China's economic construction is heavy industry, which has so many departments and needs more investments, equipment and material. It is also because agricultural units in our country, except for state farms, are collectively owned by the labouring peasants and the seed, fertilizer, labour force and other investments needed in farming are mainly solved by the collective peasants. Except for the handicrafts and small-sized industries run by the people's communes, however, industry is owned by the whole people and its funds are provided by the state. Therefore, a bigger amount must be given to industry in the distribution of funds and equipment so as to ensure its development. The growth of agriculture requires that the state industries supply it with huge amounts of farm machines and tools. But the most fundamental thing lies in conscientiously carrying out the line and policies of the Party and state for the rural areas and fully mobilizing the socialist enthusiasm of the peasants. Only when farm production develops and the collective public accumulation expands is it possible to realize agricultural mechanization. Here an excellent model is the Tachai Brigade In Shansi Province, a national advanced unit in agriculture Tachai was a poor mountain valley where drought occurred nine out of every ten years and the per-mu yields never exceeded 100 jin Under the leadership of the Party after liberation, the Tachai peasants carried out land reform and agricultural collectivization. They worked arduously and skilfully and displayed the revolutionary spirit of self-reliance, and finally turned the poor mountain valley into fertile land with high and stable yields of more than 1,000 jin per mu. They are now striving for farm mechanization. Since Chairman Mao issued the call "In agriculture, learn from Tachai" in 19fi4, a nationwide mass movement to Learn from Tachai has been surging forward. Going all out and aiming high, hundreds of millions of peasants are making a steady effort to fundamentally transform China's farm production conditions.

Rapid Farm and Industrial Growth

Guided by Chairman Mao's revolutionary line and acting on the general principle of "taking agriculture as the foundation and industry as the leading factor," we have achieved steady increases in farm production. Agricultural development has enormously promoted the rapid growth of light industry, heavy industry and other sectors of the national economy. In 1971, the nation's total grain output reached 492,000 million jin, which more than doubled the figure in the early post-liberation days. Big increases were also reported in technical crops such as cotton and oil-bearing crops as well as in forestry, animal husbandry, sideline occupation and fisheries. There were serious natural disasters in 1972, but thanks to the consolidated collective economy of the people's communes, large-scale water conservancy construction and farmland capital construction over the past years and the tenacious struggle to combat adversities, we gathered in a good harvest of 480,000 million jin of grain, equivalent to the level of 1970 which was a year of rich harvest. Technical crops also grow rapidly, and cotton—a major raw material for light industry — has increased fivefold compared with the years immediately after liberation. Now grain and technical crops supplied by our agriculture are sufficient to satisfy, though only initially, what the people and industrial development require. China's light industry has also attained vigorous development. Compared with 1949, output of important light industrial products in 1972, Including cotton yarn, cotton cloth, paper, sugar, salt, cigarettes and leather, showed an increase of several to dozens of times. At the same time, we have also branched out into new industries which produce chemical fibre, plastics and its products, synthetic detergent, wrist watches, bicycles, sewing machines, cameras, optical glass and photo-sensitive materials. This has enabled our light industry to gradually add to a relatively complete list of products of different varieties and initially cope with the increasing needs of people's living and stale construction. The vigorous growth of agriculture and light industry spurs on the development of heavy industry. Output of steel reached 23 million tons in 1972, or more than 130 times the pre-liberation figure. Output of coal, electricity, various kinds of machines and chemical products have either more than doubled or even risen dozens of times. China's industry has taken a big stop forward In building an independent and comprehensive industrial system. Aircraft, automobile, modern ship building and electronics industries, which were non-existent in the past, have been built. The level of self-sufficiency in equipment [cannot indentify one word here--Transcriber] has been raised, while machines, equipment and steel products are basically self-supporting. Owing to the development of industry in the hinterland, its geographical distribution has been gradually rationalized. Under the guidance of Chairman Mao's revolutionary line, China's national economy has gained some successes. But it is still backward compared with the level of the developed capitalist countries. Ours is still a developing country. However, we are determined and have the confidence to build China into a prosperous socialist industrial country in a not too long historical period and make a greater contribution to humanity.